WASHINGTON -- Representatives for the oil, biofuel and fuel retail industries told a House panel Tuesday that state and federal governments are giving the electric vehicle market preferential treatment -- at their expense.
Federal fuel economy and emissions-reduction programs contain hidden subsidies and incentives designed to stimulate growth in electric vehicles while discouraging vehicle technologies designed for high levels of biofuels, such as flex-fuel vehicles, Bob Dinneen, CEO of the Renewable Fuels Association, complained.
"While EVs will undoubtedly play an expanding role in the future of our transportation sector, it is imperative that energy, environmental and transportation policies are designed in a manner that ensures a level playing field and fair market access for all future vehicle and fuel options. Unfortunately, a number of current federal and state policies put ethanol and other biofuels at a severe disadvantage relative to EVs, even though ethanol has a proven track record as a low-cost solution for reducing GHGs and displacing petroleum imports," he testified.
The House Energy and Commerce environment subcommittee held the hearing to better understand policy implications for developing electric charging infrastructure while vehicles with internal combustion engines are expected to dominate for the foreseeable future.
Playing favorites
U.S. sales of electric vehicles are growing, spurred in part by government programs to reduce harmful tailpipe emissions, but only represent about 3 percent of all vehicle sales when mild hybrids are included. Battery-electric and plug-in hybrids represent only 1 percent of sales, according to multiple market researchers. There are more than 750,000 electric vehicle variants on the road today, about 0.3 percent of all registered vehicles, and sales forecasts for the next 20 years vary widely.
The federal government and many states offer tax credits for consumer purchases of EVs, subsidies and incentives for EV producers, subsidies for charging stations and other benefits to encourage EV adoption.
Dinneen said the EPA classifies full electric vehicles as zero emission, without factoring in the fuel source, such as coal, at the power generation plant. And the agency allows automakers to get credit toward fleet compliance targets for more than one vehicle when an EV is sold. Basing compliance values on "well-to-wheels" life cycle emissions is fairer, he argued.
Frank Macchiarola, a group director at the American Petroleum Institute, called EVs "emission displacement vehicles," saying the zero-emission classification fails to acknowledge the energy required in manufacturing the vehicle and battery systems, the energy resources used to generate electricity for vehicles and the environmental cost of battery disposal.
A recent analysis by the Union of Concerned Scientists found that cars powered by electricity have emissions equal to a gasoline car that gets 80 mpg and the slightly higher global warming emissions from EV manufacturing is quickly offset by the fuel savings.
The petroleum institute opposes tax credits for vehicle purchases or installing charging stations because it hurts taxpayers and consumers and has a reverse "Robin Hood" effect because most EV buyers are affluent, Macchiarola said.
The biggest concern for fuel retailers is the entrance of state public utility companies into the electric fuel recharging business, said Dylan Remley, a representative for convenience stores and independent gasoline stations. Their monopoly status, guaranteed rate of return from ratepayers and ability to treat capital investments as part of the utility rate base means utilities have zero market entry costs, he told lawmakers.
"Any special incentives a state provides to a public utility should be provided to all market participants on an equal footing. Otherwise, the private market will not be able to compete with a quasi-government entity that is entering the marketplace with a significant economic advantage.
"If the private sector cannot compete, the private sector's ability and desire to invest in the alternative-fuel marketplace will be limited. This, in turn, will result in fewer refueling options and less marketplace competition, which is generally bad for consumers as less market competition tends to lead to higher prices."
Utilities should invest in electric charging infrastructure with unregulated parts of their business, Remley added.
More than a dozen utilities are investing more than $350 million in customer programs and projects to deploy charging infrastructure, Pacific Gas & Electric CEO Geisha Williams, representing the Edison Electric Institute, said.
Rocky Mountain Power in Utah, for example, is taking advantage of an EV charging infrastructure incentive program enacted by that state's legislature in 2016 and a U.S. Department of Energy grant to help build DC fast-charging stations along major travel corridors. The company has announced a partnership with Uber and Lyft to grow EV usage in ride-sharing applications.
You can reach Eric Kulisch at ekulisch@crain.com